This section should be read in conjunction with PSAB Section PS 3410 on Government Transfers and the TBS Transfer Payment Policy.
Other related handbook sections are:
1. Transfer payments are transfers of money, goods, services or assets to individuals, organizations or other levels of government, without the federal government directly receiving goods or services in return.
2. Other definitions used in this Standard are:
3. In accordance with Treasury Board Accounting Standard 3.3 Prepayments, advance payment of all transfers shall be recorded as a prepayment and classified as a non-financial asset until such time as the expense recognition criteria have been met.
4. All transfers of goods and/or services shall be recorded at the fair value of the asset or service given up.
5. Transfers, other than unconditional repayable contributions, shall be accounted for in accordance with PS 3410. They shall be recognized as an expense in the department's Statement of Operations in the period that the events giving rise to the transfer occurred, as long as:
6. Those grants or contributions which the recipient would be required to repay either partially or fully because some or all of the conditions of the transfer were not met shall be accounted for in accordance with PS 3410.49 to .53.
7. Unconditionally repayable contributions (URCs) are, in substance, loans receivable. Consequently, they shall be accounted for in accordance with PS 3050 and be classified and reported as "Loans and Advances on Transfers".
8. In cases where the URC has significant concessionary terms, such as a low or no interest rate, it shall be accounted for in accordance with PS 3050.20. Where the grant portion of the URC is greater than 25% of the contribution it shall be considered to have significant concessionary terms. This definition of concessionary applies only to unconditionally repayable contributions.
9. The Consolidated Revenue Fund Lending Rate in effect for a similar term on the date the contribution agreement is concluded will be used as the discount rate in determining the present value of the loan.
10. Appropriate valuation allowances shall be recorded for URC receivables to reflect collectibility, significant concessionary terms and risk of loss.
11. Conditionally repayable contributions (CRCs) are contingencies that may qualify as contingent recoveries.
12. A contingency is defined as an existing condition or situation involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur. Gain or recovery contingencies are claims or rights to receive assets when existence is uncertain but may become valid eventually.
13. Contingent recoveries are not accrued in financial statements. Nevertheless, disclosure of the existence of a contingent recovery which is considered likely to be realized provides useful information and would, therefore, be included in a note to the financial statements.
14. When the existence of a contingent recovery, which has not been accrued, is disclosed in a note to the financial statements, the following information should be included:
15. Once it is certain that full or partial repayment is required, departments will set up a receivable and reduce the transfer expenses of the current period. Appropriate valuation allowances would be recorded.